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Business News/ Markets / Stock Markets/  Rashi Peripherals IPO: From financials to key risks, here are 10 must-know points from RHP
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Rashi Peripherals IPO: From financials to key risks, here are 10 must-know points from RHP

Rashi Peripherals, a national distribution partner for global technology brands in India, will launch its IPO on February 7. The IPO price band is set at ₹295-311 per share, with a minimum lot size of 48 shares.

Rashi Peripherals IPO allotment is likely to be finalised on February 12, while the company will initiate refunds on February 13. (Pixabay)Premium
Rashi Peripherals IPO allotment is likely to be finalised on February 12, while the company will initiate refunds on February 13. (Pixabay)

The 600 crore initial public offering (IPO) of Rashi Peripherals will open for subscription on Wednesday, February 7 and remain open till Friday, February 9. The company has fixed the IPO price band at 295 to 311 per equity share. The issue is entirely a fresh issue of 1.93 crore equity shares with a face value of 5 each. There is no offer-for-sale component in the Rashi Peripherals IPO.

Retail investors have the option to bid for a minimum of 48 shares, constituting a single lot, and can bid for a maximum of 13 lots. The minimum investment required by retail investors would be 14,160. The IPO reserved 50% of the issue for QIB, 35% for retail investors, and 15% for NII investors.

About Rashi Peripherals

Rashi Peripherals is among the national distribution partners for global technology brands in India for information and communications technology (ICT) products such as PCs, components, peripherals and accessories, servers, enterprise, and embedded solutions and services.

With the liberalisation of the Indian IT sector in 1991, the company transitioned to the distribution of ICT products of global technology brands in India.

The company has been instrumental in facilitating the entry of several global technology brands and was among the select players that led the formalisation of fragmented and unorganised ICT product distribution in India.

Between fiscal 2002 and the six months ended September 30, 2022, the company distributed 293.63 million units of ICT products. It has expanded its distribution network across India and, as of September 30, 2022, had one of the largest ICT product distribution networks in India, according to the company's RHP report.

Business verticals

Rashi Peripherals primarily operates two business verticals: Personal Computing, Enterprise, and Cloud Solutions (“PES") and Lifestyle and IT Essentials (“LIT"). It distributes products primarily through three channels, including general trade, modern trade, and e-commerce.

Diverse global partnerships

As of September 30, 2023, the company was a national distribution partner for 50 global technology brands that including ASUS Global Pte. Ltd., Dell International Services India Pvt Ltd, HP India Sales Pvt Ltd, Lenovo India Pvt Ltd, Logitech Asia Pacific Ltd, NVIDIA Corporation, Intel Americas, Inc., Western Digital (UK) Ltd, Schneider Electric IT Business India Pvt Ltd, Eaton Power Quality Pvt Ltd, ECS Industrial Computer Co., Ltd., Belkin Asia Pacific Ltd, TPV Technology India Pvt Ltd., LG Electronics India Pvt. Ltd., and Toshiba Electronic Components Taiwan Corporation.

Market opportunity

India has a large addressable market for the personal computing segment, including peripherals, storage, tablet PCs, mobile phones and accessories, cloud services, and server businesses. The market was approximately 3,450 billion in 2020, which is projected to grow to approximately 6,379 billion by 2025.

This growth is driven by several key factors, including increasing usage of technology in general, a focus on e-governance and digitization, increasing data volume, efficient supply chain solutions, and e-commerce platforms, which are enabling the growth of the industry.

Business strengths

The company stands out as a leading and rapidly expanding distribution partner for information and communications technology products in India. Its extensive and multi-channel distribution network covers the entire nation, supported by robust in-house infrastructure. 

It has established enduring relationships with renowned global technology brands, fostered by a committed engagement strategy with customers. Additionally, it boasts a diversified and comprehensive product portfolio, offering value-added solutions, as highlighted by the company in its RHP report. 

Objectives of the issue

Out of the net proceeds from the fresh issue, the company proposes to utilise 326 crore for prepayment or scheduled repayment of all or a portion of certain outstanding borrowings availed of, up to 220 crore for funding working capital requirements, and the balance amount from the net proceeds will be utilised for general corporate purposes.

Book-running lead managers

JM Financial and ICICI Securities are the book-running lead managers for the Rashi Peripherals IPO, while Link Intime India is the IPO registrar.

Financial performance and return metrics

From fiscal 2020 to fiscal 2022 and the six months ended September 30, 2022, the company demonstrated consistent growth in revenue from operations, EBITDA, and restated profit after tax. The revenue from operations followed an upward trajectory, reaching 39,344.82 million, 59,250.48 million, 93,134.38 million, and 50,238.09 million in Fiscal 2020, 2021, and 2022, and the six months ended September 30, 2022, respectively. Notably, it registered a compound annual growth rate (CAGR) of 53.85% between fiscal 2020 and fiscal 2022.

The restated profit after tax exhibited growth from 382.31 million in Fiscal 2020 to 1,363.50 million in Fiscal 2021, 1,825.11 million in Fiscal 2022, and further to 673.75 million in the six months ended September 30, 2022. Simultaneously, EBITDA increased from 938.58 million in Fiscal 2020 to 2,152.27 million in Fiscal 2021, 3,052.17 million in Fiscal 2022, and further to 1,365.12 million in the six months ended September 30, 2022, its RHP showed. 

Key risks

The company, while excelling in distribution, does not manufacture the information and communications technology (“ICT") products it sells. These products, sourced from global technology brands, are distributed through general trade, modern trade, and e-commerce channels.

The company said it has significant credit exposure to its channel partners and other customers, and it said that any negative trends in their businesses could cause the company significant credit losses and negatively impact the company's cash flow and liquidity position.

Additionally, dependence on third-party transportation providers for product delivery and warehousing services in Chennai, Tamil Nadu, introduces operational vulnerability.

Allotment details

Rashi Peripherals IPO allotment is likely to be finalised on February 12, while the company will initiate refunds on February 13. It will credit the shares to the demat accounts of the eligible allottees on the same day. Rashi Peripherals shares will be listed on both the stock exchanges, BSE and NSE, on February 14.

Should you subscribe to the IPO?

Leading domestic brokerage firm Sushil Finance has recommended investors "subscribe" to the issue with a long-term view. "The company is asking for a PE multiple of 10.54x on the upper end of the price band and using diluted EPS for FY23 ( 29.5) and a PE of 8.53x annualizing diluted EPS for H1FY24 ( 18.24). The industry average is 9.92x. The issue seems fully priced," said the brokerage.

Another domestic brokerage firm, Swastika Investmart, also recommended a "subscribe" rating to the IPO, citing the company's future growth potential and the positive industry outlook.

 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

 

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Published: 06 Feb 2024, 03:47 PM IST
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